French Fume as Macron Bypasses Parliament to Pass Pension Reform

Major protests erupted in France again last week when French President Emmanuel Macron used executive branch constitutional powers to bypass parliament and push through a controversial pension reform that increases the retirement age by two years to 64.

The government faces two no-confidence votes on Monday afternoon in France as a result of the move, which came just before the pension reform plan was to be voted on by the National Assembly, France’s lower house of Parliament. Instead, Prime Minister Élisabeth Borne announced the government would invoke Article 49.3 of France’s constitution.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

Article 49.3 gives the executive branch the power to force a bill through the National Assembly without a vote. While the French Senate had already approved the measure, it had become apparent after weeks of debate that it would not pass the lower house, which spurred Macron to make the controversial decision.

When Article 49.3 is triggered, the opposition parties by law are given 24 hours to file a no-confidence motion against the government signed by at least 10% of the members; both the far-right National Rally and a coalition of other opposition parties filed motions on Friday. If the no-confidence motions are rejected, the bill is passed. But if either motion of no confidence is supported by a majority of members, the bill is rejected, Borne must resign and Macron could either appoint a new prime minister or dissolve parliament and hold fresh elections. This, however, is extremely rare: It has only happened once, back in 1962.

In January, Macron announced plans to reform the French pension system, which included raising the retirement age for French workers to 64 from 62. The announcement angered many French and led to widespread protests.

All French retirees currently receive a state pension that averages approximately €1,400 ($1,490) per month, which is funded by contributions from current workers. The French government says the reform is needed because the system is being jeopardized by an aging population that has resulted in an increasing number of retirees supported by a decreasing number of contributors.

Under the French government’s plan, the retirement age will be raised by three months per year, starting in September 2023, until it reaches the target age of 64 in 2030. The reforms also mean that, beginning in 2027, it will be necessary to have worked 43 years to receive a full pension; in past reforms, that requirement would not phase in until 2035.

According to the Organization for Economic Cooperation and Development, France has one of the lowest retirement ages in the industrialized world and spends nearly 14% of its economic output on pensions, which is more than most countries.